richfool wrote:GeoffF100 wrote:As I have said, if the market believes that the pound will fall against the dollar, it will demand higher interest rates from UK bonds. That view will also be reflected in the pricing of US bonds hedged into sterling. If you believe that the market has got it wrong, and that the pound will fall further against the dollar than the market expects, then you are free to bet against the market.
Geoff, VUTY (US Treasuries) shows a yield of 4.02%. Whereas VGOV and IGLS show yields of 1.6% - 1.67%. Wouldn't that, on the face of it, suggest that US Treasuries represent a higher risk than UK Gilts? Accepted their respective pricing will also be a factor. But whatever, the US treasuries are providing a higher (immediate) income.
The historic yields are irrelevant. VGOV has a YTM of 4.4%, a credit quality of AA- and a duration of 9.5 years. VUTY has a YTM of 4.6% and a credit quality of AA+ and a duration of 6.0 years. The US government's credit rating is a little better, and the US Treasury Bonds have a slightly higher yield, but over a shorter period. Both the US and UK yield curves are pretty flat between 6 and 9.5 years. The market seems to think that the dollar will fall a little relative to the pound over the next six years. I do not see any justification for accepting the higher volatility of VUTY. I do not want a duration as long as 9.5 years either, which is one reason why I favour VAGP (or the accumulating version VAGS).
https://www.vanguard.co.uk/professional ... stributing
https://www.vanguard.co.uk/professional ... stributing
http://www.worldgovernmentbonds.com/cou ... ed-states/
http://www.worldgovernmentbonds.com/cou ... d-kingdom/